May 2, 2004

Google's IPO Scam

For all the hoopla surrounding Google's IPO plans, it seems bizarre the company is intent on establishing two classes of shares - regular shares for folks willing to buy into the offering, and super-voting shares for insiders.

Google founders Larry Page and Sergey Brin claim they need the super-voting shares to maintain control over the company's strategic future but this is more of a case of wanting to eat your cake and have it too.

Perhaps Page and Brin didn't want to take Google public but it must be difficult to resist the demands of liquidity-starved venture capitalists, including Kleiner Perkins Caulfield which stands to have its US$12.

5 million stake balloon to US$3 billion when Google starts trading.

For all their smarts, Page and Brin fail to realize the cost of going public is relinquishing control.

When you ask investors to give you US$2.

7-billion, you have to be fair.

Instead, Google is violating its own "don't be evil" mantra.

Of course, when you have investors chomping at the bit to give you money, you can set the terms of a deal any way you want.

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